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The Coming Age of Innovation in 2014 and Beyond

In May 2013 Imaginatik fielded an on-line survey to 204 business decision-makers across a wide range of industries and from these results produced a report “The State of Global Innovation, 2013” just released.

On Points by Wassily Kandinsky

I have found this report to be really an excellent understanding of critical issues that still need to be addressed for innovation to deepen its position within organizations.

I’d written my own predictions for 2014 before I had only just read this report just recently released. This was in my last post “Heading for 2014, will innovation change?” I see an even sharper agenda emerging for me.

To Imaginatik, I really can only offer the highest compliments for a well-structured report, thoughtful in its views and tentative forward-looking conclusions. It helps me greatly.

**For me this is the outstanding innovation report of the year 2013**

The report covers a variety of questions around Strategy and Execution

Imaginatik asked respondents a variety of questions about their companies’ approach to innovation strategy, governance, leadership, process, and results.

The major findings of this study are divided into two sections: Strategy & Readiness and Process & Execution.

I’d like to summarize only the section 1 as my initial takeaways here.

Their Section 1 was focused on Strategy & Readiness and explored the relevance of innovation as a management priority and dedicated enterprise strategy.

Imaginatik asked questions exploring topics such as:

In the eyes of senior leadership, how pivotal is innovation for the company’s success?

To the degree that innovation matters to senior executives, what is driving it as a priority?

Who, if anyone, has taken leadership of innovation programs at today’s companies?

To what extent have companies created governance structures for innovation management?

The present innovation state can be summarized by these two comments:

The overall picture is that despite the emergence of innovation as a dedicated business competence, most companies are still early in the maturity curve.

Much work remains before innovation truly has a permanent home within the modern enterprise.

Most of the comments following are directly from the report but summarized in my takeaways.

Innovation matters at a strategic level, but formulation of strategy is still middling.

Today’s enterprises are actually placing innovation as an executive priority and organizational mandate.

In terms of whether companies have chosen to make innovation a dedicated priority, the answer was a resounding yes, nearly two-thirds of organizations indicated that innovation had been a dedicated priority for two or more years.

Already, innovation has begun to show some longevity as a serious business trend.

So what are the drivers, it seems external change is driving the need to innovate

There is clearly a strong imperative to innovate among companies that have chosen to create dedicated innovation leadership and corporate governance plans. However, the substrate of “innovation” can vary widely from one organization to another, and between industries.

When asked about the main drivers for their innovation efforts, the keyword for our respondents was “change.”

The highest-scoring drivers dealt with major, potentially disruptive, external change: the changing business environment, changes in customer needs or preferences, and the need for markets or segments to enter.

Each of the four highest-scoring responses equate to the ability to either adapt to, or profit from, change in the outside world – including the changing external environment (48%), changes in customer needs or preferences (44%), and new markets or segments to enter (43%). More generally, lack of growth (37%) also scored high, presumably due to a changing world and the need to find new sources of growth.

By contrast, all of the lowest-scoring factors dealt with the incremental ability to compete better in existing marketplaces: responding to price pressures, responding to the moves of competitors, the need to scale concepts better and faster.

Most interesting, the two factors most associated with competing better in the same markets were dead last among innovation drivers: the need to respond to competitors, and price pressures.

To summarize the drivers it appears that finding fundamentally new paths to differentiation and growth is driving innovation much more than trying to compete better in existing / established markets.

The majority of respondents seemingly felt incremental change was far less important than re-inventing the playing field or finding brand new ways of adding value.

The efforts to build innovation capabilities has become fashionable for executives to tout

Are organizations doing that much too actually spear head innovation on the ground?

Overall, the findings show that although a vast majority of firms expressed innovation as a clear management-level priority, fewer seem to have created the requisite governance and leadership structures to make sure effective follow-through. Organizations have indeed only begun to create dedicated governance structures for innovation.

The survey data does suggest that today’s corporate leaders are creating innovation governance structures to address this disconnect: More than three-quarters (81%) of responding companies had some form of innovation governance.

Even more impressive, a surprising number (33%) of organizations reported having a central innovation group that was both a) driving a corporate innovation agenda, and b) working together with other functions and business units.

Struggling with the distinct rhythm of innovation

A big issue still remains that without someone carrying the torch, organizations often struggle to truly create this innovation rhythm.

When done well, innovation is a very different rhythm from business-as-usual – necessitating the productive coexistence of creativity and digestion, unstructured chaos and rigorous order.

Many companies are still new in their efforts to treat innovation as a top priority, and therefore they are still experimenting with corresponding organizational schemes for executing.

Leadership: Innovation is increasingly led from the top

There is now a strong trend for innovation to be led by a top-level corporate leader with responsibility over all types of innovation, not just technologies and products.

One-third of respondents said the Chief Innovation Officer (or similar) was the primary leader of innovation within the organization.

The CINO’s influence is still dwarfed by the CEO, who tops all executives both as the leader centrally responsible for innovation (41%) and for having (at least) partial leadership of innovation (77%).

Other than the CEO and CINO, other C-level roles are rarely implicated as the primary innovation leader – this may be caused by the prevalence of cross-functional executive committees – which was only barely behind the CEO as a primary pillar of innovation leadership (40%).

With more respondents indicated the CEO or a cross-functional executive committee as their key source of innovation leadership it becomes an interesting mix of innovation’s top management.

From my perspective it will be interesting to see where and how the CINO role develops to strengthen the discipline and function of innovation as a clear organization structure. Or will it stay caught in a similar ‘trap’ as the Chief Information Officer, often not a main player within the C-level hierarchy, often caught in rapidly changing situations, trying to adapt and re-align?

How these three actors of the CEO, CINO and Cross-functional executive committee build a sustainable rhythm will be a key to tomorrow’s best emerging practices of innovation. Hand-off, accountability and execution will need addressing carefully.

There is some big question remaining of whether the strategic follow-through eventually catches up with the generalized executive desire for innovation does still remains to be seen.

In the coming years, it will be interesting to see where the balance comes to rest between the CINO, the CEO, and the executive steering committee. To a large degree, all three are central stakeholders – and should have strong leadership roles – in the innovation program.

This is further evidence of innovation’s rise onto the executive agenda, the rational for which was explained well by one respondent: “Without the leadership team pushing the agenda, [innovation is] an uphill battle.”

“Many organizations in our survey acknowledged a mismatch between the upper and lower levels of innovation leadership within their organizations”

As one respondent pointed out, “Though the idea of innovation was initiated at the highest levels of management, at lower levels it is perceived as another thing to do, in other words, just a project.”

Respondents report significant strategic and cultural roadblocks to innovation success – suggesting that the effectiveness of these innovation governance structures still needs improvement.

In many organizations innovation still struggles to justify its existence as the demonstrable outcomes of innovation are not yet fully aligned with corporate objectives.

Even at a strategic level, respondents believed that the most important goals for the innovation program were new products and new processes. Yet the single biggest outcome of innovation efforts was cost savings, with process improvements near the bottom of the list of benefits.

My thoughts here

For me, this understanding of innovation and its value is still at a high level of immaturity and the ‘massive’ gap between the desires for change, to deal with the disruptions occurring externally and the inner safety-first attitudes that are still prevalent is a huge struggle to resolve.This is our critical mismatch point to resolve.

Top management mindsets need to radically alter for innovation to finally take hold. There is a time to stop being ‘proud’ and ask those that relate to the rich potential within innovation and its different types for the help they need, to understand all the aspects required for it to be fully mobilised. A piecemeal approach will simply not work.

Innovation can galvanize growth, provide fresh jobs and provide that often missing identification within organizations, called ‘engagement’. It can transform your future. There is this urgent need to get off the cost cutting, extending product only way of thinking. Innovation is much bigger than that and it is the external forces that are forcing the C-level change in valuing innovation.

Some conclusions from this report

Overall, the survey data, combined with respondents’ comments, suggests that most companies are still in the early stages of developing a well-articulated innovation strategy, despite solid strides in building first-generation innovation leadership and governance models

Some of the conclusions were that Innovation has become a dedicated corporate function where the level of purposeful focus is attempting to be matched by a corresponding focus on high-level leadership/stewardship of innovation, as well as a corresponding level of corporate structure and governance of innovation.

Imaginatik offers some conclusions that as the innovation discipline evolves, they believe that both the objectives and results of innovation will become more sophisticated, and thus increasingly well aligned with one another.

They conclude that with the increasing development of new practices in leadership, management, process and execution corresponding to the unique challenges of breathing innovation to life within the auspices of large, siloed, traditionally bureaucratic institutions.

For the time being, the relative mismatch of corporate innovation priorities and documented innovation results suggests that organizations still have a lot to learn with respect to both what are the most reasonable priorities and expectations for their innovation programs, and what are the corresponding best emerging practices for following through to make it successful and well embedded in organizations.

The report greatly informs me and I hope you!

The report tells me, there is MUCH work to be done at the top of organizations to shift their attitudes and make better connections.

Within the report lies much of the innovation pathway that most organizations still have to travel but there are some very encouraging signs the real innovation journey has really begun and moving down a path to greater innovation fitness and that all important point, awareness.

Imaginatik suggest: “Eventually innovation will become more deeply embedded in the enterprise and it will be increasingly indistinguishable from operations, and thus increasingly well suited to helping the corporation side stay ahead of the furious pace of external change”

I would recommend you download and read all the report, to reset the innovation buttons for 2014.

Thank you Imaginatik for a really excellent summary of the State of Innovation in 2013. Roll on 2014 to see how we can resolve some of these critical issues.

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3 thoughts on “The Coming Age of Innovation in 2014 and Beyond”

What is becoming absolutely clear is that the innovation agenda has to be led from the top. The question is not any longer about “if” innovation is required, it is what to do to ensure innovation happens. The biggest problem with C-level executives is that they think they “know” how to implement innovation. In a workshop I conducted last year at an MNC we were trying to formulate a few problem statements for the participants. Funny thing is that when I asked the CEO to work on them, we finally got ‘solution statements’ instead. This is a mindset issue. CEO and other C-level execs have not yet understood that framing problems statements are critical to involving the rest of the company. But they have been used to the command & control paradigm so far that they are illiterate in the innovation discipline.